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7 Rules Of Investing

7 Rules Of Investing

| October 20, 2020
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If you want to succeed in investing, does it take a set formula or skill and talent? Either way, investing can seem intimidating and overwhelming. But you don’t have to just cross your fingers and hope for the best. Whether you choose to purchase stocks and bonds, contribute to a retirement account such as a 401(k), or even invest in real estate, there are time-tested principles to investing wisely, and following these 7 rules of investing will help put you on a path toward reaching your goals (hopefully without headaches).

1. Manage Your Emotions

Behavior is a major factor in investment success. By being aware of your emotions and knowing your behavioral pitfalls, you can avoid many potential investment mistakes caused by panic. Finances are an integral part of our lives and it’s difficult to separate them from our emotions, but your nest egg will thank you if you can learn to take your time when making decisions and stay strong and committed when the market feels like a roller coaster.

2. Stay Away From Predictions

Wouldn’t it be wonderful to have a crystal ball to predict where the markets will go or what the economy will do? Unfortunately, it’s not that simple. Don’t worry about what you can’t control, but channel that energy into focusing on the factors you can impact, such as the types of companies or funds you invest in and how much you save. On that same token, don’t make your investment decisions only based on past performance. Just because a mutual fund blew everyone away last year doesn’t mean it will thrive this year. 

3. Invest For The Long Term

You may want to check financial tasks off your to-do list in a hurry, but remember, investing isn’t a race. It may take time for you to reach your goals, and if you go in with that mindset, you may see more growth and can celebrate the small victories along the way. 

4. Control What You Can

It’ll be easier to stay committed to your long-term plan if you control what you can and let go of the rest. That’s why it’s important to clarify your goals, needs, and time horizon and design a plan tailored to your unique situation. Having an investment philosophy and strategy will give you purpose when hard times come. Your reason for investing could be to save for retirement, put aside money for college tuition, or save for a down payment on a home. Knowing your purpose makes the journey more meaningful. 

5. Avoid Unnecessary Risk

All investing involves risk, but that is neither a reason to avoid investing nor a reason to throw all caution to the wind. The level of risk you take should correspond to your age, time horizon, and goals. Your portfolio isn’t the place for speculation or bets, and your plan should reflect your risk tolerance. 

6. Start Now

Since investing is a marathon, time is on your side. The longer you allow your money to sit in an investment account, the more time you’ll have to reap the benefits of compound interest. Don’t save investing for the future when you feel more prepared. Each year you wait means you’ll need to save more in a shorter amount of time.

7. Diversify Your Investments

It’s drilled into us pretty regularly that we need to diversify our portfolios. Since investing is never a guarantee, you may want to consider investing in various formats and companies to help reduce your risk of loss. That way, if a company goes down or an industry tanks, you don’t lose all your money at once. 

Rules To Live (Or Invest) By

Investing doesn’t have to be complicated, and it doesn’t have to scare you. If you want to pursue a positive investment experience and implement these tips into your investment strategy as you pursue your financial future, our team at Match Point Financial would love to help. Contact us at 352-207-8014 or schedule a complimentary phone call using our online calendar to start taking control of your money and stay informed about your investments.

About Chris

Chris Reed is a financial advisor and the founder of Match Point Financial. Since 2002, he has been helping people make informed choices with their money and pursue their financial goals and objectives. He started his career with MetLife and has continued seeking to provide his clients with the best possible service through A.G. Edwards, UBS, and finally through partnering with Cetera Advisors LLC and forming his own independent firm in 2010. Learn more about Chris by connecting with him on LinkedIn or register for his recent webinar “Are Your Old 401(k)s Collecting Dust and Losing You Money?” here.

Financial Advisor: Securities and advisory services offered through Cetera Advisors LLC, member FINRA/ SIPC, a broker/dealer and a Registered Investment Advisor. Cetera is under separate ownership from any other named entity.

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